Our readers frequently inquire about the difficulties associated with entering the federal sales market. Due to the increasing frequency of such inquiries, we will once again examine market entry roadblocks and what a small business can do to overcome them. Market entry is inherently difficult due to the massive size of the federal government and the red tape required to make a sale. However, contrary to popular belief, red tape is not the primary barrier to market entry.

Roadblocks to Market Entry

The following is a partial list of common problems companies encounter when trying to enter the federal market:

• Competition is fierce and is becoming more so every day.
• Federal buyers are risk averse and often prefer to send business to vendors that have performed for them in the past.
• Finding federal end users and establishing a relationship with them is laborious and time consuming.
• Most newcomers do not have a way to close the deal after they have sold the end user.

Critical Steps to Follow When Entering the Market

A company new to the federal market should focus its efforts on targeting and contacting federal end users. Your team’s initial targets should be limited to those in your geographic area. Your sales staff cannot reasonably expect to cover all of thousands of agencies in the federal market. After identifying your first two target agencies, conduct extensive research on each agency in order to identify the people with whom you must speak. We suggest using the Internet (see http://www.firstgov.gov/)and the telephone directories to uncover end users who need and want your company’s products or services.

Let’s assume you have identified several federal end users and your sales staff has made personal contact with these end users. We will further assume you have aggressively pre-sold your company and your products or services to the end users. Consider using credit cards and purchase orders to close your company’s sale if the price point of your product or service is less than $25,000. For larger price points, obtain a General Administrative Service (GSA) schedule contract and use the contract to close your sale. A GSA schedule contract provides federal buyers with your company’s pre-negotiated price list and it further allows the buyers to avoid the lengthy and expensive public bidding process. Among the many other advantages inherent with holding a GSA schedule contract, it gives a vendor a critical closing mechanism and allows the federal customer to procure what he needs quickly.

Give your sales organization the resources necessary to enter the market. A company’s federal sales budget must include a commitment to funding business developments efforts. Management should not expect miracles. The federal sales market can be very lucrative but a company must be patient and committed to the program. It can often take more than a year for a business to see the results of its federal sales initiative.